AUSTIN - Lt. Gov. David Dewhurst has asked a border lawmaker to help resolve the differences between House and Senate versions of this session's major tax shift legislation.

The announcement that Sen. Juan "Chuy" Hinojosa, D-McAllen, was one of five senators on the conference committee for House Bill 3 came soon after Hinojosa helped defeat moves from fellow Democrats to instruct conferees to hold the line on sales tax hikes and increase the homestead exemption.

A motion from Sen. Eliot Shapleigh, D-El Paso, instructed conferees to stick rigidly to the Senate's stated aim of not increasing the sales tax by more than half a cent. A motion by Sen. Gonzalo Barrientos, D-Austin, called on conferees to push for an increase in the homestead exemption to $30,000.

In both cases, Hinojosa voted with the Republican leadership to defeat the measures. In the case of Barrientos' motion, Hinojosa's vote was crucial in a 15-14 split. Hinojosa later defended his votes.

"We need flexibility in the conference committee, we need to be able to negotiate," Hinojosa told the Guardian. "We need to be able to make decisions based on what is best for the public without having our hands tied behind our backs. I intend to work with the conference committee to make sure we come up with a tax that is fair to everybody."

When the Senate debated HB 3 in the early hours of Monday morning, Barrientos succeeded with an amendment to increase the homestead exemption to $30,000. The amendment later died. Barrientos provided colleagues an analysis of what the savings would be if the homestead exemptions were increased. In Hinojosa's district, where the average home value is $78,000, the tax saving would have been $278.05, compared to $126.44 under HB 3.

"I was somewhat surprised my motion to instruct was defeated because this was the exact same vote we took and supported the other night," Barrientos said. "I was trying to help the middle and the bottom - those people who have $40,000 homes, $60,000 homes, and even $100,000 homes. It seems to be an omen for what may be coming back from the conference committee - a further tax shift from businesses to consumers."

Shapleigh said his motion was designed to keep Senate conferees from caving in on the sales tax. The House plan increases the tax by one cent. Shapleigh said the Senate had been insistent all year that any increase be pegged to half a cent.

"What drives the regressivity of the Texas tax code is the sales tax. We rely on it more than any nearly any other state. We have the third highest rate now. Imagine what would happen if we went to the highest rate in the country," Shapleigh said.

Hinojosa said he was not concerned about peeling away from other Democrats. "It's a process," Hinojosa said. "I've been here 20-plus years and I have been named top ten at least twice. I know how to maneuver, how to play the political chess game, if you will. I am not a suicide bomber. I will work to protect the interests of the working families."

Asked if he could prevent the sales tax being increased by a cent, Hinojosa said there were no guarantees in politics. "It's a very subjective process. I am going to do what is best in terms of public policy and what is best for my constituency," he said.

The Senate version of House Bill 3 would see the current cap of $1.50 per $100 property valuation drop to $1.30 in 2005, and $1.10 in 2007. A $5 billion loss in state revenue would be offset in part by a sales tax hike of half a cent. Low-income Texans who qualify for the Lone Start Card could apply for a sales tax rebate. The Senate plan also increases taxes on alcohol, cigarettes and motor vehicles.

Sen. Steve Ogden, R-Bryan, chair of the Senate Finance Committee and author of the Senate version of HB 3, declined to ask for an official tax equity note on the bill. The House version of the bill, which is very similar to the Senate's, would mean a net tax increase for all those earning less than $100,000 a year, according to the Legislative Budget Board.

Hinojosa said he did not place much faith in the assumptions made in tax equity analyses. "Sometimes the reports, the analysis that is given by certain public groups and special interest groups, are not correct. Everyone has their own agenda. My agenda is that of public policy. My agenda is to protect the public," Hinojosa said.

Based on 2003 Census data, only 6.8 percent of area households in the McAllen-Edinburg-Mission metropolitan statistical area earn incomes above $100,000.

According to the same data, 94 percent of El Pasoans earned under $100,000 a year. "In my Senate district, 200,000 families will pay increased taxes under this bill. In all, 94 percent of El Paso families get tax increases under the bill," Shapleigh said.

Shapleigh said he had warned of a shift in taxes to low- and middle-income Texans in letters sent to Dewhurst and Ogden earlier this year. "HB 3 is the greatest tax cut for wealthy Texans in Texas history," Shapleigh said. "Clearly, at every step, business has peeled off taxes on business and shifted it to consumers. What I fear is more of the same. More and more taxes will be shifted to low- and middle-income Texans and off wealthy Texans."